I'm currently using my Asus EEE 1000H. Running Ubuntu intrepid.
It works wonderfully. It's a lot easier to carry around than my regular laptop (hence why I bought it).
I think lots of the GNU/Linux-running netbooks are being returned because people don't understand that not everything runs Windows (and assume 'Linux' is just some package on Windows or something), so bring it home and can't find the start button, so return it.
GNU/Linux is a different system. If you haven't used it before, it'll take you a few weeks to get used to it. This is the same as going from Windows to Mac too; it's just something you're not as used to.
I'd suggest you find out if any of your friends use GNU/Linux systems. If so, get them to explain some stuff to you and show you around. Also, most electrical stores (Dixons etc.) stock some models of the netbooks, so try them out.
The main limitations are size (don't write a book on one of these things), monitor size (not best for photo editing etc.), and power. They have lower-paced processors compared to full laptops or desktop machines, so while they're great for browsing the web, listening to music, etc., they aren't a workhorse. They won't play the latest games well.
Advantages: first, it's a free system. This means that you can, in principle, edit it any way you like. You're not stuck with the defaults like Windows or Mac OS X. It's also free of cost too -- updates will always cost you nothing. It's also a damn sight more secure than Windows is --- you don't have to run antivirus every day, or antispyware, etc.